The Programmatic Globe: Brazil

Our head of Global Advisory Services goes deep on the state of programmatic and e-commerce in Brazil.

Here at Sociomantic, we’re lucky enough to get to work with marketers in over 60 countries, helping them from our 19 offices around the globe to take advantage of the many benefits of programmatic advertising technology powered by local market expertise.

In working across these diverse regions, one thing has become crystal clear: when it comes to e-commerce and programmatic marketing, no two countries are alike! And no one has a better view on the differences and eccentricities of these different markets than our VP Global Advisory Services, Lothar Krause.

That’s why we’ve invited him, with support from each of our local teams, to share unique, market-specific insights about the ins-and-outs, the ups-and-downs, the triumphs and challenges of programmatic advertising in each of the countries or regions that we are stationed. Next up: Brazil!

July 8th, 2014 marked a controversial day in Sociomantic’s history. Only three weeks after our Sao Paulo office received countless congratulation messages for their second anniversary, many colleagues (particularly from our Berlin headquarters) couldn’t resist reminding our Brazilian team of Germany’s historic semi-final win. Yes, football can sometimes play a controversial role in multinational startups. Luckily, Germany’s win had no impact on our successful business in Brazil. However, what many forgot is that while our LATAM office is operating from Brazil, it comprises people from various countries to serve Portuguese and Spanish speaking clients across eight hugely growing markets, namely Brazil, Mexico, Colombia, Peru, Venezuela, Argentina, Chile and Panama. After two years of building up many successful and exciting partnerships in the region, we are thrilled to share the insights we have gained in our home market in the region, Brazil.

The B in BRIC

With 204 million inhabitants, Brazilians make up more than one third of Latin America’s population. While Brasilia, the capital, is located in the center of the country, most business is usually conducted in cities near the coast – particularly Sao Paulo and Rio de Janeiro. According to the International Monetary Fund (2013), Brazil has made its way to become the seventh largest economy in terms of GDP, making it the second most economically powerful BRIC nation after China. Furthermore, according to eMarketer, e-commerce is growing by 25.4 percent and digital ads by 28 percent — about three times as fast as most developed European markets or the US. While every second Brazilian is currently online, internet penetration will grow to 60 percent in the next 3 years, a level similar to most developed markets. No doubt, the digital economy is flourishing, yet there are some unique characteristics that both stimulate and inhibit the country’s lightning-swift growth.

Brazil is Unique – in Many Ways

Brazil is world-famous for an unequaled beauty in football, picturesque beaches, a priceless Samba culture and countless other things. What makes the country unique from an e-commerce perspective is its logistics and payment processes. Since Brazil’s economy is mainly centralized in Sao Paulo and Rio de Janeiro, many online stores offer free and fast delivery to these cities exclusively. Delivery times for the rest of the country can often be as long as 15 business days. As a result, many customers often decide to purchase offline to avoid annoying waiting times. Advanced retailers are finally recognizing the problem and have recently started working on more favorable delivery options.

While delivery times can create negative experiences for customers, common payment options can be a struggle for online retailers. In general, Brazil has a very advanced credit card culture. While 4 in 5 Brazilians own a credit card, 70 percent use them to pay on the Internet (SPC Brasil). In contrast, however, around 25 percent of customers purchase online by means of Boleto – a payment option unique to Brazil. Boleto enables customers to access a prefilled bank slip which they can either pay by means of internet banking or print out and, at a later stage, pay at banks, drugstores, supermarkets or post offices. When choosing the latter, customers sometimes forget to pay or simply purchase a range of products and eventually only pay for the ones they really want. Needless to say, this can pose significant inventory and cash flow problems for retailers.

As a result, Brazil’s most advanced advertisers have started to adjust their marketing strategy to users who choose Boleto as a payment option. By building a smart CRM logic, they are able to adjust their KPIs to such users or link them to a different landing page to take into account the possibility of cancelations caused by Boleto. We have helped many advertisers maximize their ROI by integrating such CRM logics as part of their programmatic buying. Let’s take a look at a few other unique characteristics of the Brazilian market.

World Champions in Social Media

The 8th of July not only marked a tough day in Brazil’s football history, it also exemplified the important role social media plays in this country. As witnessed all over the world, millions of Brazilians shared their sentiments on Facebook and Twitter after the game. In fact, next to the US and India, Brazil is the world’s biggest Facebook market (Socialbakers.com). According to eMarketer, 79 percent of all internet users access Facebook at least once every month. Given the fact that Brazilians are world champions in engaging with social media ads (eMarketer), smart advertisers are usually interested in working with a programmatic buying partner that can manage both Display and Facebook campaigns to reap the full benefits of RTB.

Next to their affinity for social media, Brazilians generally tend to be very curious about the latest trends in technology – particularly from the US and Europe. This holds true for consumer electronics, and it’s also the case for advertising technology. While the interest in modern technologies like programmatic buying is constantly growing, the complexity of product adoption is often a barrier. That’s why Brazilian marketers attach great importance to working with a trusted partner. We have learned that relationships are pivotal in this market and therefore regularly engage in face-to-face meetings with our partners all over Brazil in order to facilitate smooth ongoing operations.

The Middle Man

In light of the curiosity of Brazilians for new technologies like programmatic buying, demand for online marketing experts is growing very fast. That’s why advertisers and technology providers often have a hard time attracting experienced talent. A large number of big advertisers therefore employ agencies or full-service technology providers to facilitate their online marketing endeavors. While a lot of e-commerce players are bound by law to work with agencies to buy ad media, more and more small and medium businesses make their first experiences in online advertising by means of utilizing a third party.

RTB is currently growing by 80 percent year-over-year in Brazil and agencies as well as advertisers are starting to understand that it’s not only a relatively new and exciting technology, it will soon also define Brazil’s vastly growing digital ad market. We are extremely happy to have witnessed Brazil’s steep growth over the last two years and are thrilled to continue being in the epicenter of one of the highest-potential markets slowly but surely shifting towards maturity in the next few years – most certainly also in terms of programmatic buying.

From a Local

“After an economically challenging year marked by the World Cup and political elections, we are extremely happy to witness continuous and fast growth of programmatic in Brazil. 2015 will be an exciting year for Brazil’s e-business and I believe the following two topics will define the market: 1. Business Intelligence – how can advertisers profit most from their data? At best, customized RTB campaigns on the basis of business intelligence logics will be pivotal for successful advertisers. 2. On/offline data – how can strong brands leverage the combination of online and offline marketing? Successful advertisers will be able to include a brick & mortar logic in their attribution modeling.”

Want to learn more about using programmatic display to drive sales growth and customer loyalty in Brazil? Be sure to reach out to our Sao Paulo team to learn more.